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GWJ Conference Call Episode 277

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Video Games, Used Games & The Used Games Market, Your Emails and more!

This week the guys talk about video games and explore some topic or another. This description is amazing because I wasn't on the show and I've been on a plane all day. Hurray!

To contact us, email [email protected]! Send us your thoughts on the show, pressing issues you want to talk about or whatever else is on your mind. You can even send a 30 second audio question or comment (MP3 format please) if you're so inclined.

You know, the whole used game discussion in a way reminds me of the music industry and the DRM/piracy issues they've faced with digital music. Granted the gaming industry faces those exact same problems, but the shift to digital music and things like the iTunes store seem to foreshadow what might happen for games in the near future, and is already happening on the PC market.

I'm all for digital games, and like was mentioned on the call, the only hang-up I have is with the ability to loan games. What if the next round of consoles allowed for a loaning system similar to what certain e-readers are doing? For example, you could loan a copy of Call of Duty to your buddy over Xbox, and the game disappears from your library and appears in his until he returns it. I think this sort of system could provide the best of both worlds.

Your portrait of the benefits to the gamer from used game sales was a little off.

Recently I was quite ill and needed to recuperate. I went out to buy a few games to see me through and was able to buy three great games (because I'd deliberately waited before buying) for roughly £10 each. A new game in the UK is £45 to £50 (the full RRP is £60 but no one pays that.) After I'd played those three games I traded them in for £20 getting a brand new game for £25.

Going on those figures, and ignoring the trade in deal, for £150 I could either buy three games a year or fifteen. It isn't an ideal way for me to be operating as far as the games manufacturers are concerned but the economic realities (I'm not that flush) mean I'd be silly not to buy some games used.

Of course the games companies and console manufacturers themselves face a similar moral vs financial dilemma. Ideally they would keep all the manufacturing of discs and consoles in the US but by export all those jobs to the far east they can do the same manufacturing work at a fraction of the cost. Financial considerations seem to have won out in that case.

I don't object to games companies trying to wean me of used games or even asking me to please buy their games new but I would object to being demonised for making the most of my hard earned money when they are doing the same thing only on a much grander scale.

I bought A Ion Drum Rocker a few years ago. But never got into it. My main problem was the fact it had a static electricity issue. And with living in an apartment, i dont have the room to do the "mods" I read up on. I been trying to sell mine for the past year now, locally. Since i have no clue how i would ship this thing anywhere...

So now it sits up stares at the end of the hallway, gathering dust.

I may not be the greatest
I may not be the worst
But, I will do my best

Great show! I do wish that y'all had discussed Ely's final point (which was the same point Tycho from Penny Arcade made in his post on this topic some time ago): Used buyers are literally not customers of the game makers. They are customers of GameStop etc.

Also, Rabbit wants the companies to penalize people who sell their games rather than people who buy used. This system does that. By having these day one DLC codes included in a $60 game and then sold for $10-15 to used buyers, they are lowering the value of a used game. The first party to feel that should be (and I expect is) the person selling the game to GameStop. He should expect to get $10-15 less than he might have otherwise gotten. The buyer should then theoretically expect to pay less for a game with this kind of DLC than he would otherwise pay for a "complete" used game, and if he doesn't, that's on GameStop.

You missed what seems to me to be another way developers seem to be trying to prevent used sales which is by shoehorning multiplayer into everything.

Julian mentioned Left 4 Dead as an example of how a developer keeps players from selling their games by continuing to provide value to it, but is it that that has kept L4D alive or is it the fact that L4D is a multi-player game? I know that I only ever played the single-player campaign and have never looked at the game since, so whatever additions Valve has made to the game are lost on me.

I only mention this because it annoys me that more and more games seem to be focusing on multi-player at the expense of single player. Take Portal 2 for example, half the game is closed off to me simply because I'm a committed misanthrope. How much longer could the single-player campaign have been if they hadn't put so much effort into the multi-player part? Or how about the upcoming Mass Effect 3? How much shorter or less satisfying will the story be because they had to put resources on a multi-player mode that pretty much no one was asking for?

So, is multi-player a bandwagon trend or another way of trying to head off used sales?

Good point on multiplayer, tanstaafl. My thinking for a while now has been that multiplayer games are day one purchases because you need to play them while the community is there, but single player games can wait until the price drops unless I'm dying to play them right this minute. That's a "problem" for publishers that will still be there even if they get rid of the used game market.

So, is multi-player a bandwagon trend or another way of trying to head off used sales?

I'd say it's a bit of both but I don't think used game sales are actually a problem. I think it's a side battle when the bigger problem is this: the console market has not grown while budgets for making console games has skyrocketed. The console market growth is simply not keeping up with development costs.

Last generation the Dreamcast, PS2, Gamecube and Xbox sold around 208 million units.

This generation the 360, PS3 and Wii have sold around 215 million units but you need to factor in the longer generation cycle. What makes matters worse is that 94+ million of those consoles are the Wii and publishers have largely ignored that console with their big budget titles.

This is why so many studios are closing down and this is why publishers are scrambling to figure out a way to squeeze every bit of cash out of their consumers, including the idea of "fighting" used game sales.

In my mind, used game sales wouldn't be a problem if the console markets growth matched the development costs. Buying a used game would be like buying a used book, movie or CD; a non issue.

And as a side point, you have to wonder what happens next generation. With new hardware comes a new arms race. How many studios are even able to keep up?

I'm not sure that there's going to be that much of an arms race, at least as much as development is concerned.

Right now, the costs are, in my view, largely from all the HD texturing going on in many of these games, for graphical showing off. Hand-made textures requiring thousands of man-hours to create is what's causing the problem. If there's going to be an arms race, within the current projected technological paths, I think it's going to be a race to see who can make the process the cheapest the fastest, without compromising on the essentials.

On the issue of used games, I think it's important to emphasize what's going on and to keep ourselves and others informed.

For instance, in Meatman's link "Do We Own Our Games?" RPSs' concerns are genuine and troubling to many gamers, but it is one which I immediately appreciated as soon as I read Steam's EULA. Steam presents itself as an online shop in the manner of Amazon, but it's obvious from having to sign in before accessing your games that it is actually a service provider, not a shop. It doesn't sell games. It sells services - access to games, which it can revoke at any time, for no apparent reason. It is more like a cable provider where everything is PPV, than it is an online shop.

For this reason, a game "sold" on Steam is worth many times less than the same copy of the game sold as a standalone disk, which is worth less than a pirated copy of the game, which presumably can be played and copied without limitation.

In a free market structure, ironically, the "pirated" game could probably be sold for $60, and each subsequently inferior version for less, each according to their end-user utility.

Essentially, publishers removing access to on-disk content, locking away game access through portals and activations, and other such shenanigans are voluntarily reducing the value of their games, while expecting them to sell for the same amount of money.

Analogously, it's like your car dealer removing the paint job in an effort to get you to buy from them, and not used.

Don't ask me how that's supposed to make sense. It looks totally bonkers from my perspective.

Regarding Caylus on the ipad, I can attest that it is not that difficult to learn from the tutorial. This from a person who doesn't have a lot of experience with Euro board games. If you're at all interested in the genre, I highly recommend it.

If the tutorial leaves anyone scratching their head, another way to learn is the How to Play Podcast by Ryan Sturm, who does a great job of teaching board games. He's got about 3 dozen covered there.

While I'm at it, I'll throw out a few more ipad board game recommendations: Ticket to Ride (endorsed a few episodes back by Rabbit I believe), Puerto Rico, Medici, and McGuire (a $0.99 version of the 1962 classic Acquire). There's even a free version of Dominion which seems to have really poor AI but, hey, it's free and has the original art.

Recently I was quite ill and needed to recuperate. I went out to buy a few games to see me through and was able to buy three great games (because I'd deliberately waited before buying) for roughly £10 each. A new game in the UK is £45 to £50 (the full RRP is £60 but no one pays that.) After I'd played those three games I traded them in for £20 getting a brand new game for £25.

Honestly, the game producers and developers really don't care about this. Most likely, the three cheap games you bought were headed for the bargain bin anyway. They don't get much cash from that anyway.

What they want to stop is Gamestop selling a used game for $5 off of list price within a week after launch. Skyrim, as of now, is selling for $54.99 used. They're buying the games for $30, and making $25 profit per unit. It's pretty easy to see why the publishers are pissed about this.

Valve wrote:

“Also, the game will be even better,” they added, missing an historic opportunity to create the first product delay press release to mention that a product is being delayed to make it worse.

The way I see it, the significant secondary market for games only says one thing: the initial pricing is too high for optimal profit-taking on the supply-demand curve.

There is a demand for single Skyrim playthroughs, but not at $60. A significant portion of the demand is at $30, so Gamestop is meeting the demand by allowing gamers to resell the games for $30. This is an expected outcome of a free market economy involving properties. Part of the value of the initial game is understood to be in resale - cars would retail for much less if they could not be resold.

As Elysium notes, the resale market expects degraded products - scratches, voided warranties and the like are part of the bargain. That said, publishers locking away content mandates a direct reduction of retail price on the secondary market, which affects their customers - the people who are looking to buy the product new, with the understanding of a resale later. It reduces the value of the product they can resell.

Ergo, they are not just affecting the secondary market, which will simply respond by lowering demand for resold products, but also the primary market; because it is their (primary customers') product which is being actively degraded at the same price point.

Let's note that sellers of physical products are also concerned about the secondary market, but they generally don't openly express entitlement to those profits. Moreover, they generally entice customers away from used markets by adding value to primary market products, not by reducing the value of primary market products.

Recently I was quite ill and needed to recuperate. I went out to buy a few games to see me through and was able to buy three great games (because I'd deliberately waited before buying) for roughly £10 each. A new game in the UK is £45 to £50 (the full RRP is £60 but no one pays that.) After I'd played those three games I traded them in for £20 getting a brand new game for £25.

Honestly, the game producers and developers really don't care about this. Most likely, the three cheap games you bought were headed for the bargain bin anyway. They don't get much cash from that anyway.

What they want to stop is Gamestop selling a used game for $5 off of list price within a week after launch. Skyrim, as of now, is selling for $54.99 used. They're buying the games for $30, and making $25 profit per unit. It's pretty easy to see why the publishers are pissed about this.

Interesting. I can see that. I guess it's that specific type of transaction that is poaching the early sales the games companies are relying on for the bulk of their profits.

It's be interesting to know how many new game sales are funded by trading in old games.

The way I see it, the significant secondary market for games only says one thing: the initial pricing is too high for optimal profit-taking on the supply-demand curve.

There is a demand for single Skyrim playthroughs, but not at $60. A significant portion of the demand is at $30, so Gamestop is meeting the demand by allowing gamers to resell the games for $30. This is an expected outcome of a free market economy involving properties. Part of the value of the initial game is understood to be in resale - cars would retail for much less if they could not be resold.

As Elysium notes, the resale market expects degraded products - scratches, voided warranties and the like are part of the bargain. That said, publishers locking away content mandates a direct reduction of retail price on the secondary market, which affects their customers - the people who are looking to buy the product new, with the understanding of a resale later. It reduces the value of the product they can resell.

Ergo, they are not just affecting the secondary market, which will simply respond by lowering demand for resold products, but also the primary market; because it is their (primary customers') product which is being actively degraded at the same price point.

Let's note that sellers of physical products are also concerned about the secondary market, but they generally don't openly express entitlement to those profits. Moreover, they generally entice customers away from used markets by adding value to primary market products, not by reducing the value of primary market products.

Except that's not what's happening here. The day one DLC is available for free to anyone who buys the game new. And it's not even as if it's core gameplay, like if Nintendo decided that you needed a code to make Mario jump that you had to buy if you didn't get the game new. It's bonus material.

It's like the Catwoman stuff in Arkham City; that was bonus content. It didn't affect the core experience, unless you're the sort of person who chafes at the idea that someone, somewhere, there is a person who got something for free that you had to buy; in which case, you must really hate Christmas and birthday parties.

I can see the slippery slope argument, but I find it hard to take it seriously when it comes from the same people who consider the downsides of a digital only distribution model to be negligible if not laughable. If we must trust Valve because they haven't screwed us yet, then we must grant the benefit of the doubt to the company that published Kingdoms of Amalur because they haven't screwed us yet either.

Seems to me that the current model of granting bonuses to people who buy new is a pretty darn good solution, so long as they remain bonuses like the professor Genki pack. Giving one person a bonus for behavior you want to encourage does not equal screwing the people who don't behave that way. Though I realize that anyone raised in a school that abolished the valedictory address so it wouldn't make the C students sad would feel that it was.

I don't get the same set of bonuses with a used car that I get with a new one-- for example, I have to pay if I want the same warantee coverage that I'd get with a new car. I don't see a problem with that.

Of course, given how video gamers behave as consumers, how would we know if they crippled the game for used buyers? We already buy brand new games that are broken, and shrug it off as if the business model for the video game industry isn't completely broken.

But why not let the consumer decide whether they want to buy a lesser used copy? If the consumer as a collective decides that publisher X held back too much content, then the consumer doesn't have to buy the damn game, and the dollar-infused lesson to the publisher is: don't do that anymore. Simple. Easy. Capitalism.

It's so hard to imagine what we'll have nostalgia about in the future, but I can really imagine us looking back on the "early days of mobile" (because in the future it'll all be implants, right?) with fondness. As to whether iPad is tied to the Great Recession -- well, great point on how one iPad takes the place of a TV, a computer, a gaming device, etc... Good call there.

It's also worth noting that the video game industry took a hard hit last year (revenues down 20%), and that has to have something to with both the economy (demand) and lower cost alternatives like $1 iOS games (supply). It must be true that $1 games are displacing $60 games, even if only marginally -- the question is to what extent.

Are iOS and Facebook games being counted in "video game industry" numbers?

re: Why not just pair up good game mechanics with good story? Sure, you can do that, but doing it arbitrarily is what marginalized the adventure game for me. I never finished Gabriel Knight: Blood of the Damned because the game mechanics (puzzles) started to get in the way of the story. Instead of feeling like I was helping the plot move forward (or, preferably, making choices that influenced the plot), the game bits felt like things I had to get out of the way to experience the story.

Here's my question: When we "play a game for the story," do we mean quite the same thing as "reading a story"? I heard (Rabbit?) say that reading the Wikipedia summary of ME3 just won't cut it. Fine, the Wikipedia version will just hit the plot points and suck out all the drama. But let's say you could just read a good novelization or watch a well-edited Machinima -- would that cut it? Or is there still something to the gameplay that's essential to really experiencing the story?

By "pirated," I mean a product that has no copy protection and no locked content. Presumably, in a free market environment, such a product would be distributed to saturation by the initial publishers. A similar product available right now would be the MOO 1 and MOO 2 package from GOG.com, which is downloaded without DRM and with no limitations on copy.

Ironically enough, I have been able to convince several game-shy friends to purchase from GOG.com on the reassurance that the copy would not be limited. They normally pirate.

EDIT for clarification:

By "products with degraded quality," I necessarily mean the "legitimate" game products that are commercially available right now. Such products are often saddled with a variety of unnecessary code, all aimed at enforcing monopoly rights by crippling the end-product in some fashion. For instance, Nintendo games are region-locked, and games often are "copy-protected."

Obviously code that you can copy without limit, and functions on a wide variety of devices in a wide variety of modes is a superior product, all other things being equal.

This is the reason why I know certain acquaintances of mine will acquire a pirated copy of a game after they've bought a legitimate copy of it - they had no intention of ever using the legitimate copy, since it's inferior.

I think the main argument for the used market involves price sensitivity and we've seen Valve handle that on the PC side. Which is why I don't miss the used game market at all on the PC. I do not trust MS to "get it right" with pricing of digital games, or do sales as aggressively and as frequently as Valve. So with that in mind, I'm very skeptical that getting rid of the used games market is a net positive to console gaming.

And for all the people who don't mind paying $60 for games at release, you have to understand that price sensitivity isn't for people like us. It's for kids, or someone with a limited game budget. Steam sales can turn those people from people who may occasionally play a game into people who love games, which is a net positive for everybody else who plays games. If there's no such price flexibility, we're excluding people from the hobby. All because the current enthusiasts don't care about the prohibitive costs. Just take a look at the comics industry to see how well that works out.

"But when the game, the second-person engine, starts again, it tells you about yourself ... like Scheherazade and her king mixed up together in one, trying over and over to tell yourself your own story, and get it right" - You by Austin Grossman

Back when money not time was my biggest constraint on gaming, I'd factor game resale into my purchase decision -- so a $40 game would be a $20 game in my mind, after Ebay. I'm sure the game publishers who oppose used-game sales have run their economic models and determined they'd be better off with fewer sales at a higher price, but I do think a segment of the market considers hocking old titles into their purchase decision.

(In practice, a kid goes to Gamestop and gets $10 I get for selling Also-Ran II, which works like a coupon for buying New Hotness III. That might be good for the industry as a whole, but each individual company is left feeling like they're underwriting the next company's sales?)

I think that there's more than good enough reason to distrust the notion that game developers, and especially game publishers, are really in touch with the gamer market - the whole of it, not just the enthusiast part that's represented in this podcast.

Piracy represents unmet demand for various goods and services that developers and publishers are not meeting. Moreover, publishers and developers often think in terms of entitlement and moral issues, not in terms of economic ones. That suggests that whatever models and modes of thinking they're engaged in, it's not economic.

Gamers who buy used games and gamers who buy new games with the intent of selling them later - these are the less enthusiastic or less moneyed parts of the gamer market. You cannot change those conditions by reducing the value of secondary market products - the only thing that does is to alienate these fringe markets. Alienate them enough and they'll just migrate to other gaming markets (such as F2P models) or just drop gaming altogether in favor of pastimes that don't treat them like dirt.

Once that market is migrated, all you're left with is the pure enthusiast market, and as Pyroman suggests, there is already a prior example of what happens in that instance.